On 3 Jan 20X7, Tim paid $224,000 for equipment used in manufacturing motor vehicle parts. In addition to the basic purchase price, the firm paid $700 in freight charges, $100 in insurance for the equipment while in transit, $12,100 in customs duty, and $3,100 for a special platform on which to place the equipment in the plant. Tim estimates the equipment will remain in service for five years and have a residual value of $20,000. The equipment will produce 50,000 units in the first year, with annual production decreasing by 5,000 units during each of the next four years. In trying to decide which depreciation method to use, Tim has requested a depreciation schedule for each of the three depreciation methods (straight-line, units of production, and reducing method).
Required:
Determine the amounts of depreciation expense and accumulated depreciation that will be shown in the relevant financial statements for the financial years ended 31 Dec 20X7 and 20X8. Where appropriate, round off to two decimal places.